The news that Rwanda Revenue Authority has decided to levy taxes on every piece of luggage that goes through their warehouse has been greeted with mixed reactions, with airport officials denying knowledge of the new tax measures, whereas RRA top officials say it had been discussed with airport management authorities, and passed.
The new arrangement regards all cargo as taxable cargo, regardless whether it was recognised previously as non-taxable.
The reason given for this change of tack is that many people order high-value goods through courier companies like Fedex and DHL, then proceed to trade the goods, having avoided paying tax for them. So the remedy for this, RRA has decided, is to levy taxes on everything that passes through their warehouse.
Such a decision is highly irregular, to say the least. The percentage of people clearing goods at the warehouse with parcels routed through courier companies first of all, is very small compared to all the other clearing passengers. So it is unfortunate to say that because there is a small band of tax evaders, the majority of law abiding tax payers should be punished by a blanket declaration. There are now regrettable delays in clearing because of this system. One wonders why it is not the courier companies that are charged.
Furthermore, how can a few evaders cause a whole government policy to be reversed – overnight, with, as it is turning out, minimum consultations? Because if the CAA director denies knowledge of the issue, then that is a pointer that things are not flowing as they should. Therefore the policy that makes some goods non-taxable is abused, yet there are important reasons why the relevant ministry wanted those goods put in that category, in consultation with the RRA. Some of the non-taxable goods include computer and telecommunication equipment, and scholastic materials.
RRA should harmonise its operations with all stakeholders to avoid unnecessary controversies. It should not be seen as a body of indiscriminate and insensitive tax gatherers that does not place development policies at the heart of its operations in its hunt for money.